- Hardcover: 256 pages
- Publisher: John Wiley & Sons; 1 edition (18 May 2010)
- Language: English
- ISBN-10: 047052670X
- ISBN-13: 978-0470526705
- Product Dimensions: 15.2 x 2.3 x 23.4 cm
- Customer Reviews: 389 customer ratings
- Amazon Bestsellers Rank: #2,04,575 in Books (See Top 100 in Books)
How an Economy Grows and Why It Crashes Hardcover – 18 May 2010
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From the Back Cover
EVER WONDER . . .
- Why governments can spend without ever seeming to run out of money?
- Why some countries are rich while others are poor?
- Whether spending or saving is the best cure for a bad economy?
- Where inflation comes from?
- Why it's so hard to catch a fish with your bare hands?
HOW AN ECONOMY GROWS AND WHY IT CRASHES
Understanding how all the pieces of an economy fit together can be a daunting taskespecially when the experts can't seem to do it. But when you get down to the basics, it is much easier than you may think. How an Economy Grows and Why It Crashes uses illustrations, humor, and accessible storytelling to take economics off its lofty shelf and put it back on the kitchen table where it belongs.
This straightforward story of fish, nets, saving, and lending exposes the gaping holes that lie hidden in our global economic conversation. With wit and humor, the Schiffs explain the roots of economic growth, the importance of trade, savings, and risk, the source of inflation, the effects of interest rates and government stimulus, the destructive nature of consumer credit, and many other economic principles that are so frequently discussed and so poorly understood.
The story may appear simple on the surface but it will leave you with a powerful understanding of How an Economy Grows and Why It Crashes.
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Top international reviews
It draws the picture of America and later on, China, and in a way also attempts to predict what will happen with trade between the two, and how that affects others as well, but mainly, America.
The reason I am dropping a star is because although the story is very compelling in the way it is written, having to guess all the time and draw the parallel gets tiresome by the end of the book, especially if you are not a) American vested in the politicians names, b) Someone that knows relatively well what happened with the latest financial crisis, e.g. housing market crash, dot com bubble, and the probably future crash (qe... and such).
Very enjoyable and readable book, recommended.
As it is, you get an easy to understand introduction to freemarket economics (capital, risk, investment etc.) although this could have gone further (no mention of opportunity costs). After this first part (which I suspect is a summary of some of the key points in Irwin's book) the Schiff's try - and fail, sadly - to explain in broad strokes the errors of government intervention that led to the recent economic crash.
Whilst a brave attempt, the stretching of the analogy wears thin; I know almost nothing about economics, yet I found myself wishing to hear the correct terms and explanations rather than trying to imagine what the various fish-themed inventions equate to.
Another problem is that, in an effort to be true to what they obviously believe to be a clear chain of events, the beautiful clarity and logic of the choices available to Able, Baker and Charlie at the beginning of the book disintegrates into "and then this happened, and then this happened... (Because it just did)." It was always going to be hard to combine a fictional, exemplary take with the messy reality of life. The new characters come thick and fast, making decisions that the reader struggles to understand as quickly needed in this rapidly paced book.
Overall, if you had a bright 14-15 year old and wanted them to grasp freemarket economics before falling down the well of obligatory socialism that seems to accompany youth, you could do a lot worse. But for an adult, the combination of simplistic cartoons and an attempt to make the analogy fit every desired message becomes a frustration.
Yes, there is a lot of complexity in the details and many tomes on economics would have you wade through graphs, calculus and statistics until your ears bled and yet never give you a birds eye view of what an economy actually is.
Peter Schiff is a man who, in 2006 (and even before that), was forecasting with great accuracy, the recent/current financial crisis while loftier economists scoffed at his warnings.
This book offers a clear and understandable overview of what an economy is, what makes it grow and what can go wrong. It does this by relating the tale of a fictional island, whose main natural resource is fish, and follows the development of its economy from its inhabitants first attempts at wealth creation through to the islands rise to inter-island trade dominance and subsequent fall.
Despite being a 200+ page book about economics it is easily read within a day and, surprisingly for so easy a read, will leave you feeling much wiser. In fact you'll probably finish with the thought "surely economics can't be that easy?". It may take you a bit more time to realize that it is, and that the complexity offered up by some economists is merely a smokescreen for their own lack of understanding (after all, how many of them saw the recent troubles coming?).
These were basic questions that I used to ponder over as a child, and as I got older, I learnt new stuff (e.g. macroeconomics) but my questions as a child remained unanswered. That was until I finished reading this book.
Essentially, Peter Schiff tells a story, initially in it's primitive stages which gets complexed as you read further. It starts with 3 characters Able, Baker and Charlie who, in the beginning, have no other time except catching one fish a day, eating it, resting and sleeping. It states that through sacrifice and innovation, their standard of living increases (e.g. building a net that can catch two fishes). Thereafter, the story becomes complex with the introduction of banks, paper money, foreign nations etc but nevertheless, remains an extremely exciting read and understandable.
If there is one thing I have realised is that all this wealth (i.e. the wealth of nations) comes about by lowering the cost of food (in this case the fish i.e. being able to catch more than one fish a day). I have realised that this is key to the success of standard of living (i.e. this is what creates the factories, the manufacturing industry, the tourism etc). This statement seems quite simple, yet something that is not first thought of given the complex economical system that we live in. Whilst I don't think the book states that clearly within the text, it gave me a sense of satisfaction that if I learnt just this from the book it would have been sufficient and a worthwhile read. I'm happily to say, that fortunately it touches on many more topics.
Nevertheless, the wonderful tale presented by Peter Schiff captivates the reader to keep reading more. You can quite comfortably read this book within a few days even if you set aside a couple of hours at the end of a busy working day.
I have never studied finance and didnt know how the markets worked. This works as a fantastic intro to the markets, although if you are looking for an indepth guide, i dont think its for you.
HIghly recommended as an intro, great read.
I bought this as a holiday read so didn't want anything too heavy and I found it to strike the right balance of being a light read on a serious subject. If only A'Level Economics had been taught this way 30 years ago, I might have taken more interest!
That said, I am searching eagerly for an intelligent critique of this book that is written with the same level of clarity (so don't direct me to an economics tome by your favourite historical figure unless it is _as readable and clear as this one_).
We have become too accepting that 'serious' books should be wrapped up in complicated scholarly language. It is refreshing that the Schiff family have altogether contributed fun and profound summaries of Economic Theory.
Where are the other books like this from the experts themselves? Bring them out!